Investing and Teenagers

Investing and teenagers sounds odd but where do children learn about money? From their parents, so the teen years are a great time to learn not only about money but investing that money.

Investing for long term and short term goals – most teens know they want a new car or a college education or even a business of their own. In order to meet any of these goals they will need money. Let them be aware that most of the time their income will not be enough for them to meet their financial goals and they will have to learn how to invest.

Of course you will have to be in charge of their accounts, since they legally can’t have one until they are 18 years old. The alternative would be a trust that invests for them. This is not what most teens really want when learning about investments. They want to be a bit more hands on, so set up the account and let them learn to make the decisions. Teach them about buying stocks and how to reinvest their earnings.

Teach them about 401k accounts and IRAs that will be part of their future as they look towards retirement. Explain how your account works for you including how much you hope to have when you retire. This will help them understand that today’s value of a dollar isn’t necessarily tomorrows. This will get them to realize lots of things when it comes to money.

Together decide how much of a return on their investment they are going to need to meet their goals. Do the math with them and make sure they understand how much of their weekly wages from a job they are going to part with. They have to understand that in order to meet their goals they will give up something now to have more later on. This isn’t a savings account that they can withdraw from if they need something next week.

Once your teen has their account set up watch the difference it makes in their approach to spending. They will begin to track their investments and will eagerly calculate how much money they are earning each day or week. This will teach them about being responsible as well as how to plan for their future. When their goals are not met they will figure out new strategies with you.